One of the first and worst affected countries in the global financial crisis, Iceland is now a rare flicker of light in Europe’s long gloom.
With growth returning, international debts getting paid off and unemployment dropping, the mood is much improved. “We’re doing well,” economist Olafur Isleifsson tells the German paper Die Welt (translated at WorldCrunch). “We’re in the process of pulling ourselves out of the swamp.”
The New York Times, too, takes up the “swamp” metaphor to explain the comeback:
It has repaid, early, many of the international loans that kept it afloat. Unemployment is hovering around 6 percent, and falling. And while much of Europe is struggling to pull itself out of the recessionary swamp, Iceland’s economy is expected to grow by 2.8% this year …
Analysts attribute the surprising turn of events to a combination of fortuitous decisions and good luck, and caution that the lessons of Iceland’s turnaround are not readily applicable to the larger and more complex economies of Europe.
But during the crisis, the country did many things different from its European counterparts. It let its three largest banks fail, instead of bailing them out. It ensured that domestic depositors got their money back and gave debt relief to struggling homeowners and to businesses facing bankruptcy.
Unlike many countries, Iceland largely refused to bail out its banks –with many British and Dutch investors that had enjoyed high interest rates left abandoned. They are doing something else differently, too – prosecuting the “banksters” (banker-gangsters).
Olafur Hauksson, a police commissioner from a small town, was appointed special prosecutor. He was the only applicant.
Hauksson’s “purge” has to date led to a number of convictions, with two former bank officials and the former finance minister’s chief aide currently serving prison sentences. More are awaiting trial. But the prosecutor is not hurrying. “We know that all eyes are on us, that we must not fail. To hasten the process would inevitably lead to errors and, given the current context, with so much mistrust towards institutions on the part of Icelanders, we must, more than ever, be above reproach,” he tells Le Monde’s Charlotte Chabas (translated at Press Europ). His hope is his compatriots will one day “look back and be proud to have drawn the lessons of the past”.